A Window Opens For Federal Financial Aid at Edtech Programs Within Colleges

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This week brought some encouraging news for educational technology companies and code schools, whose students often can’t qualify for federal grants and loans.

The Obama administration is moving ahead with an experiment that makes federal student aid available for a small number of degree or certificate programs offered through partnerships between established higher education institutions and non-traditional providers of instruction and training.

The U.S. Department of Education announced that it has chosen eight such teams to serve as the testing grounds for its EQUIP program (Educational Quality through Innovation Partnerships). The department’s goal is to learn how best to support a new generation of post-secondary educational opportunities that will lead to jobs, particularly for low-income students. If the results look good, the government might broaden the program, and more students would have the financial means to attend a coding bootcamp or take classes online.

Texas was the only state with two successful EQUIP applicants. The University of Texas at Austin is teaming up with coding and software bootcamp MakerSquare to offer students a 13-week program where they can earn a certificate in Web development. The Dallas Community College System plans to allow students to earn an associate degree in business or criminal justice by taking as many as three-quarters of their courses through online education company StraighterLine.

The other six successful candidates are based in New Jersey, New York, Delaware, Massachusetts, Oregon, and Colorado. Three of those partnerships pair a code school with a private university or state school. Two others concentrate on workplace skills in immediate demand by employers. Northeastern University in Boston has worked with General Electric to create an accelerated bachelor’s of science degree program in advanced manufacturing. Colorado State University’s Global Campus in Greenwood Village, CO, together with Guild Education, aims to help low-wage workers move up into the supervisory ranks through a one-year certificate program in management and leadership.

Thomas Edison State University in Trenton, New Jersey, is the only EQUIP participant that will offer an undergraduate liberal arts degree. The university’s partner is Study.com, a provider of self-paced, online video courses. Students can work toward the B.A. in liberal arts or a B.S. in business administration.

The Education Department expects to spend up to $5 million in Pell Grants and $12 million in federal loans in the first year of the experiment.

MakerSquare’s certificate program at UT- Austin can serve as a sort of “finishing school” for UT computer programming students, supplementing a more academic discussion with a more market-oriented approach, says Nick Mann, policy director of San Francisco-based Reactor Core, which acquired MakerSquare in early 2015. “They can take their computer science degree and make it more applicable for building an actual product,” he says.

After completing a seven-week MakerSquare bootcamp, students will receive a certificate of web development.

“There is just an astronomical demand for these skills,” Mann says. “EQUIP has opened up an opportunity for the bootcamp sector to fill that market need. We don’t expect to replace the computer science degree.” EQUIP will allow schools such as MakerSquare to attract more students over the long term, he says.

MakerSquare will charge $13,860 for the classes instead of its typical tuition of $16,920. Mann says the company has not yet decided when the program will start. It’s now working with UT on how best to coordinate with the university’s financial aid schedule.

The eight partnerships selected by the Education Department must now provide proof that their programs have been approved by the college or university’s accrediting body as well as state authorities. Once they receive final approval by the Education Department, the institutions can disburse Title IV federal aid, according to a spokesman for the agency. Some programs are expected to qualify for the 2016-2017 academic year.

The Education Department isn’t saying how many partnerships applied for the EQUIP experiment, but did say it had to turn some teams down. Some of those joint ventures between higher education institutions and non-traditional providers might still be able to qualify their students for federal financial aid if the students receive less than half of their instruction from an edtech company or other outside source, the agency spokesman says.

New applicants for EQUIP will have to wait a while. The Education Department plans to monitor the eight programs selected for as long as three years before deciding whether such learning experiences are a good deal for students and for taxpayers. Before deciding whether to expand EQUIP, the agency will be looking at factors such as the affordability of the course sequences and whether they help students get hired.

Bellevue, WA-based Coding Dojo, which recently set up a joint program to offer its software development courses at nearby Bellevue College, hopes to be accepted into the EQUIP program next time around.

“Coding Dojo and Bellevue College are both extremely interested in the EQUIP program and we will watch closely to see the results from this first round of pilots,” Coding Dojo marketing executive Kevin Saito says. “The timing of our first class did not line up with the EQUIP application so were not able to submit a proposal for this initial round. We have every intention of applying for the program in a future round.”

Xconomy Texas editor Angela Shah co-reported this story.

Bernadette Tansey is Xconomy's San Francisco Editor. You can reach her at btansey@xconomy.com. Follow @Tansey_Xconomy